Short- and Long-run Goals in Ultimatum Bargaining

The ultimatum game (UG) is widely used to study human bargaining behavior and fairness norms. In this game, two players have to agree on how to split a sum of money. The proposer makes an offer, which the responder can accept or reject. If the responder rejects, neither player gets anything. The prevailing view is that, beyond self-interest, the desire to equalize both players’ payoffs (i.e., fairness) is the crucial motivation in the UG. Based on this view, previous research suggests that responders follow short-run psychological incentives when imposing fairness through the rejection of low offers. However, competitive spite, which reflects the desire to reduce others’ payoffs, can also account for the behavior observed in the UG, and has been linked to short-run, present-oriented aspirations as well. In this paper, we explore the relationship between individuals’ inter-temporal preferences and their behavior in a large-scale dual-role UG experiment. We find that impatience (present orientation) predicts the rejection of low, “unfair” offers as responders and the proposal of low, “unfair” offers as proposers, which is consistent with spite but inconsistent with fairness motivations. This behavior systematically reduces the payoffs of those who interact with impatient individuals. Thus, impatient individuals appear to be keen on reducing their partners’ share of the pie, even at the risk of destroying it. These findings indicate that competitive spite, rather than fairness, is the short-run motivation in ultimatum bargaining.